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News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

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03:00:00

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528

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480

TOPIC FREQUENCY

Us 26, Paul Ryan 19, Washington 15, U.s. 14, Biden 14, Europe 13, Joe Biden 13, Alan Simpson 11, Lloyd Blankfein 10, Becky 9, Ron Baron 9, Romney 9, Duff & Phelps Financial 8, California 8, New York 8, Steve Wynn 8, Ron 7, Joe 7, Goldman Sachs 7, David Rubenstein 7,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    October 12, 2012
    6:00 - 9:00am EDT  

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it's friday, october 12th, 2012 are and "squawk box" begins right now. womelcome "squawk box." i'm becky quick and with joe kern kernen. andrew ross sorkin is at lincoln center. we have a packed agenda. joe biden and paul ryan clashing on on the economy and the mideast. we'll bring you highlights. plus everyone from washington to wall street is still buzzing about a cnbc exclusive. as the fiscal cliff near, steve liesman sat down with lloyd blankfein, alan simpson and irs skin bowles. >> people won't understand how critical this time in history is. we have $7.7 trillion worth of economic events that will hit america in the gut in december.
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and in washington they're doing nothing about it. nothing abit. we should be asking these guys running for president and every guy running for congress what are you going to do? >> we're accepting the challenge to do something about the looming fiscal cliff, so this morning we will ask each of our guests about the stakes and consequences for action and inaction. blankfein predicts that there would an huge positive impact on the economy and the markets if a bipartisan compromise is reached. he says he would be a buyer of the market as a result. plus andrew has a great line of corporate leaders. >> thank you, becky. and did you a remarkable job last night. so congratulations on this. we're here a ron baron, marking the 30th anniversary of his company. and as he does every year, he's bringing together his investors and the company he invests in for a day long sdwugs. we'll be hearing from ron, but we'll then talk to some of the
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leaders of some of the most successful investments that he hyatt hotel, carlyle group,ower and then steve wynn. jpmorgan chase and wells fargo both set to post quarterly results before the bell. those will be closely watched given the earnings report so far this quarter have dictated the trading in the averages. and so far a little shaky on the results. so this is important. and japan softbank said to be in talks with three major japanese banks to borrow the $23 billion to finance that bid for splint and as you saw yesterday on this show, news of a possible daily for the u.s. operator first broke here with david faber.
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softbank has been looking how you to break in to the u.s. market for months. and defense secretary leon panetta says the u.s. military could act preemptively if it detects an imminent threat of cyber attack. he urged stronger action to bolster america's defenses against such plots. officials say this was the first major policy speech on cyber security by any defense secretary. and we've been waiting. the nobel peace prize was awarded today to you, the -- no, that was "time" magazine. >> total cop out. >> a cheap mirror on the cover. this time it went to the european union. the entire union. >> who gets the money? >> i don't know. they'll use to pay off some of the unlg debts that they have. the committee citing the eu's historic role in uniting the continent saying the award was meant as a morale boost for the
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bloc as it struggles to resolve its debt crisis. i have talked about the peace prize being both political and sort of having jumped the shark years ago. arafat and -- >> there were three of them. >> the president didn't especially want it. he said, please, the whole -- the perception of me not having done enough, he just made it worse. >> the interesting thing is they're at each other's throats. you saw what happened when angela merkel went to germany. as a result of what's happening and the huge pressures they put on each other, there were riots. >> does it look peaceful over there based on what's happening with the union, the tanks and -- let's get to john harwood.
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joe biden and paul ryan mixing it up last knight in kentucky 37 this morning we're talking about the words exchanged and the laughter and the looks.37 this morning we're talking about the words exchanged and the laughter and the looks.7 this morning we're talking about the words exchanged and the laughter and the looks. this morning we're talking about the words exchanged and the laughter and the looks. >> a lot of duress to make up the -- i think people will be better -- try to scare people from voting for you. all i have to point to are the results. we're going in the wrong direction. he advocated for constituents applying for grants. we do that for all constituents. >> i love that. >> do you have the specifics, dove the -- as i said, john harwood, my friend, joins us from kentucky this morning. you call me joe -- no, that would be the opposite of last night. i always try to come on with you with one thing. don't start laughing, don't you
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do it. what i came away with, i now know what the most popular halloween mask is going to be this year. didn't you think? >> what is it? >> don't you think that demonic sort of smile that was frozen on so many different shots last night? i think there will be a lot of kids walking around saying trick or treat with that mafg. anyway, here's my question. and it was -- i didn't enjoy it as much, i didn't see the whole debate. it was on foreign policy, which is hard to do anyway. because so many presidents have been con grounded by the middle east anyway. we all want to bring our guys home from iran and afghanistan. we don't know the best way to do it without losing the game. so all these nuances. and look how many presidents a been con grounded. remember jimmy carter with anwar sadat and was it clinton, we tried for so long. so watching that, i think style will matter more than substance because a lot of the substance got lost and then the style i
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don't think favored joe biden last night. maybe you have a different opinion. >> no, i don't think the style favored joe biden and i think that was the byproduct of what he was trying to provide to the democratic ticket and did which is a level of aggression really going after paul ryan almost from the beginning. and going after mitt romney in a way that president obama didn't do and wishes he had done in denver last week. we've seen some movement toward mitt romney in the polls. you saw that when joe biden raised the 47% video and went very hard about the values that mitt romney expressing there. but of course that provided an opening for paul ryan to come back at joe biden and his reputation for say things in the exactly the right way. >> i think the vice president very well knows that sometimes the words don't come out of your mouth the right way. >> but i always say what i mean.
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>> now, that was a very funny line by paul ryan, but what you saw was then vice president biden picked up and continued to go aggressively as he did all night after paul ryan. and he said it was the republican ticket that was being disingenuous when paul ryan was criticizing obama's economic record, the economic stimulus and biden says, wait a minute, you asked for some of that stimulus money. >> i love my friend here. i'm not allowed to show letters, but go on our website, he sent me two letters saying by the way, can you send me some stimulus money for companies here in the state of wisconsin. we we sent millions of dollars. >> you did ask for stimulus money. >> on two occasions we advocated for constituents applying for grants. we do that for all constituents. >> i love that. this is such a bad program and
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he writes me a letter saying the reason we need this stimulus, it will create growth and jobs. his words. >> what you saw there was more laughter by joe biden at paul ryan's response. and what you really have, becky and joe, is a situation where when you're the out party, you can say pretty much anything you want. you embrace the popular parts of the incumbent administration's record and say, yes, i want to get out of afghanistan like he does, yes, i want to protect medicare just like he does, but then you find the weak points, the problem, and you go hard after that. joe biden couldn't believe that paul ryan was saying some of the things he was saying. thought he was way too liberal with the facts. i use that pointedly. but the problem was joe biden's response, was it modulated in t that would affect undecided voters. two snap polls, one showed paul
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ryan coming out narrowly ahead, cnn said biden did better. cnbc, more lopsided in biden. i'm not sure the relevance of that, but two bottom lines and i'll throw it back to you. one, joe biden needed to give democrats a sense of fight and enthusiasm and he did that. he had a lot of aggression. but i don't yet think the democrats have gotten the tone and the argument right to come back at what romney and ryan are doing at them. and that tees it up for the debate at hofstra last week. >> and i even likened to like the world cup, remember you got the two teams in the finals and then the guys they beat they play in that game for -- i mean, this was interesting, but it just sets up the next debate to see how the president comes back. >> tuesday night. so this comes very quickly.
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>> and i watched intrade, it moved up a little. and then all the way back to where it started. >> it's exactly the way the reds are set up for the next round of the playoffs. >> you know, john, here's the thing. they did lose three straight, i'll and i had plit thdmit that. but after spotting them six runs on that grand slam, they battled back. and in the sixth, seventh, eighth and ninth, they had the tying run at home every inning. one inning they had a man on first and second, no outs, the count 3-2, a bad call, they threw the guy out at third. we can't talk -- anyway, i'm not going to obsess over this. >> pain. >> did you catch the jayson werth walk-off homer? >> can ied a dc >> can >> can i adopt -- i don't know
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if i can adopt anything in washington. >> you got them, baby. >> you'll let me do that? >> we will link arms and root for the nationals tonight. i'll going be there. >> if they were playing the yankee, i would be with you on that. thank you, john. we'll see you. a john harwood mask might be more popular. >> he has good hair. >> they wouldn't know whether it was skol specott pelley or -- >> they have similar hair, but i don't think they look alike. i just know john too well. let's take a look at the futures. you to 150e some green arrows. this is after the s&p and dow closed slightly lower yesterday. over the last five days, the s&p is down by 2%. so modest gains this morning. right now let's head back to new york where andrew is standing by with a very special guest.
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>> we are spending the morning today with ron baron, the chairman of course and kachceo baron capital. and he is one of the great legendary investors. thank you for i would say being with us, but i guess you're being with you. >> thank you for coming. >> when you think about we saw the debates last night, when you think about the election, the fiscal cliff, everything that's going on in europe, all of the issues around unemployment in this country, you might think that you'd be anxious, but i was surprised to note that you are more bullish than ever. why? >> when i was preparing my speech last night and we've been working on it for two or three weeks already, we noticed four years ago, i happened to be on cnbc october 24th.
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that was the day market couldn't open it, it was limit down. it was down 500 points. couldn't even open. and there was a panic going on, financial bann panic going organization but stocks were really cheap. the market was 8400 then. it's now up 60%. so everyone has been afraid of the stock market for the past four years and they've been selling stocks and buying bonds. >> what's the chance investors have already missed this train? >> have they missed the train? it's now 13.8 times earnings. the stock market was 30 some odd types earnings in 1999. so since 1999 to now, earnings up 2 1/2 times and stock market multiple is down 30 something. so it's history beingly chea ll.
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you have someone head of the federal reserve, someone heftd ecb, so bernanke and draghi, like babe ruth and lieu gar rou these guys are stars. you couldn't borrow money four years ago. now it's cheaper than it's ever ben. >> i buy the bernanke argument on the short term. but at some point doesn't it all come home to roost? >> what's there to come home to roost? >> when you're printing money, at some point something bad happens. >> 180% of gdp, their deficit. we're 9%. so always a good idea to spend more money than you're take manage to try to get out of a recession. that's where you're at right now. so what you're doing is a government telling you that there will be inflation, we're going to keep interest rates very low. what that does, it encourages corporations to invest. the corporation sitting there with $2 trillion on their
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balance sheets and what they have to do, they have to invest to create jobs. the government is saying you can leave it there and wait for a disaster, but if you do, it will go down in value 4% every year and, therefore, encourage people to lower the dollar. that makes products worth more. so we're trying to encourage people to build products and plants. >> we had lloyd blankfein and simpson and bowles talking about the fiscal cliff. this is what lloyd blankfein had to say. >> i'd be a buyer of the market. goldman sachs would -- we not only value company, we're a company ourselves. we would be assuming that our business would grow, that companies would be making more acquisitions, more investments, more gfinancings. and we would have to make sure that we could provide those advice and those services.
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>> what do you make of that? >> i think goldman sachs has an interesting business. i think lloyd blankfein is a fantastic guy. he was a friend of mine. he was telling me last year that one of the reasons that stocks are so interesting is because nobody's looking at stocks. everyone's afraid. so there's all these opportunities. he has opportunities in his business to arrange financing. i have interest in my business to invest in stocks at great prices. >> ron, stay where you are. we'll be with you for the rest of the program. becky, i'll send it back to you. >> we'll be watching this very closely. it is great to see you there. great to see ron. and i know we have a number of huge guests coming up from the conference. and when we return, we'll be talking about under armour ceo kevin plank, his company has turned in an annual growth rate of 30% over the last five years.
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first we'll welcome jared bernstein to the set. he served as vice president biden's right hand man on the economy. we'll see what he and a half all the laughter last night. between listening to the numbers... ...and listening to your instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
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between listening to the numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
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we're from similar towns. he's from scranton, i'm from janes. do you know what the unemployment rate in scranton is today? 10%. >> yeah. >> do you know what it was the day you guys came in? 8.5%. that's how it's going all around america. >> that's not how it's going. it's going down. >> two minute answer, please. >> do they come in anden hair rit a tough situation? absolutely. >> the economy a key part of last night's debate. jar jared better thrnstein. you were here until about seven hours ago. so watching everything that happened last night, make you a really between poigood point is the base fired up again. >> yeah, i think there are a lot of democrats who were recently very dispirited by the first
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debate who are really back now. >> it set everything up for the presidential debate on tuesday. >> he set the table for president obama. i think he came into the debate. he clarified positions and extended a lot of effort to make sure that every questionable play, every kind of dodge to the middle was pulled back. he's a representative of congress. >> chaer mirman of the budget committee. >> i think that the vice president showed up --
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>> you doesn't think there was anything to the being too condescending? >> i didn't think so. i guess there's been a lot of theatrical review. >> style versus substance. >> i tend to focus more on the substance. i know the vice president and that's him. i really do think some of to him was kind of laughable. especially like the part on the stimulus. he's talking about how the stimulus didn't work. >> he wouldn't know which part because he was laughing the whole time. he knew he was going to be in a split screen. >> again, i won't review the -- >> all i'm trying to figure out, the post, we can't see it, but the post, the entire front of it, the another edition, vote for joe. i'm trying to figure out what rupert has up his sleeve here. he's raving about biden.
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is that to try to show contrast between him and the president? >> i think that's what rupert -- your view is one that i've heard other people say. but what i've heard a lot more people say today, and i've read a lot in the papers, we really did have a debate last night. i don't think we had much of a deba debate -- >> i don't think we learned anything more about the economy. >> i don't disagree. >> we've had 40 years of trying to deal with the middle east. and hearing the nuance, ryan wants to do one thing, we all want to bring our troops home and not give up the gains that we've made over there. beyond that it was just new answer. >> i agree with you on the foreign policy. i felt it was hard to kind of discern -- on medicare, on the
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tax, i thought biden did a great job on raising the question how do you pay for it, give us something. >> i walked away from that with a little less understanding of what both of them were talking about. i was a little more confused. >> i understand, but if you were someone who came in -- if you were completely confused by the first debate, trying to figure out what's different about these two party, don't you think after last night -- >> i feel like they went back to talking point, but i didn't get anymore -- >> you're making the point we had no wrd what tidea what the s are. it took biden? the guy running the country should have been making -- >> you'll hear it in the next debate. part of his job was to make those distunkss. >> we did think about putting me while you were talking in a box next to you and i was going to do all these weird is expressions.
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but we didn't do it because we respect you. >> thank you for not. >> mr. wewe -- i won't come it. >> very wise of you. no, i won't do it. >> thank you for being up early with us. when we come back, we'll talk with what sporting apparel can tell us about the state of the u.s. economy. more than you might think. kevin plank will explain. what stresses you out most on the road? a brand new travel survey rev l reveals lost luggage, poor internet connections and flying coach. and senior executives report higher stress levels than more junior employees and overall
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women report higher travel stress than men. see the full list of business travel headaches at roadwarrior.cnbc.com. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again.
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hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too.
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[ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. this is a special presentation of "squawk box." holding court with ceos. under armour, wynn resorts. and squawk is granting you you an all-access pass. and plus it's your money, your vote.
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>> it is mathematically possible. >> it's never been done before. >> the vice presidential debate. the final stretch on the campaign trail. and what the november election means for the global markets. it's friday, october 12th, 2012. and "squawk box" begins right now. welcome back for-to-"squawk box." i'm joe kernen along with becky quick. andrew ross sorkin is reporting live from the baron investment conference. an trdrew knew exactly how to g to that place. it's an opera house. >> you've never been to the opera? >> it's in new york? >>s. >> manhattan is what you think of -- like bronx and all those
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other places are new york, but not really the city you don't think. brooklyn? >> yeah, it is. i lived in brooklyn for a long time. >> it's a busy morning here. we're waiting for quarterly results from jb more again and wells fargo. plus we're talking about last night's presidential debate. and we're accepting a call of arms of sorts. the mission is to overt the fiscal cliff and even handle some of our long term debt problems because they go hand-in-hand, i think. you can't solve one without solving the other. steve liesman sat down with lloyd blankfein, also alan simpson and erskine bowles. and they set the stage warning of the high stakes for the country and the economy if we don't work this out and the markets. >> somebody could comes to you and says you need play 5% more on your income taxes in order to solve the deficit, are you in
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favor of that? >> of course. let me use my formulation. if you paid 5% more, you would solve the problem in a heartbeat. i don't know anybody who wouldn't pay that kind of price to benefit our country. the questions that come up are people going to-hftd pressure that's put on people who would otherwise advocate tax raises, how will you spend it and whether this defer the hard choices that have to be made down the road. no one is so unpay the reon the tick that they wouldn't condition tribute more. the issue is what resolves it is. >> we're accepting the challenge to do something about the looming fiscal cliff. so this morning we'll ask each of our guests about the stakes and the consequences for action and what would happen win action. with that, let us send it back to andrew who is with the ceo of under arrest homourarmour. i was trying to think of a slogan. e.p. came up with rise above.
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>> that's pretty good. >> rise above the partisanship. what do you think? rise above is pretty damn good. >> we need create a logo and get some sound going absolutely. we'll talk to our guests all morning about this including kevin plank, the ceo of aunder arrest mow armour. you've been a long term investment of this man ron baron whose conference we're at today. so i thank you for being here. you're a guy who created the company in your basement because you had damp t-shirts. one of the things you're doing now is going from competing for male athletes which has been your bread and butter to try to take on the female market. and i'm curious in a business
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that's all about testosterone at some level or at least how the brand is associated, how you actually transition to the female market. >> thank you very much for having me here. giving us the ability to tell our story. you're right, it started with just the problem of an athlete who didn't like the way his sweaty cotton t-shirt felt and wondered why nobody made a better alternative. so what began very authentically with football players was something that very quickly turned out to be baseball players have the same need, lacrosse players, the girlfriends of lacrosse players have the same need, as well. and we realized it wasn't a aga gender question. it was just making lives better. so we haven't stopped bringing the best product. but it's grown very organically and at the right cadence and pace. >> so you have always appealed to sort of the hardcore athlete.
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at some point when you think about nike and its real expansion, it almost became fashion. do you want to become part of the fashion world? >> i don't think you can bet on it, but you prepare yourself for those things. we couldn't -- again, we started with the best shirt in the world to wear under your equipment and all of a sudden people said could you make us a jersey, as well. we went to outside the equipment and then outfitting the coaches. then starts showing up on the golf course. and then they can wear to work and after work. so we're not exactly dressing people for the clubs, but the fact is that we're looking for kids where we want to be authentic on court, but after the court and when they're walking home, what shoes are they putting on? heritage has a lot to do with it, but it will take time. >> why don't you talk about nike, about shoes. here nike does 800 million shoes a year. you to 8 million. you've been at this five, six,
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seven years. takes him a while to get up to speed. where are you in shoes? >> later i'm talking and the title is call accept years. we've been at it since 2006. we launched our first football cleat. as good as the product was when we started, we're light years from where that was today. the fact is that we had 13 people on our team when we launched footwear in 2006. we had outsourced development, design, new factories, everything. and today we have five unbelievable factory relationships we've been with for six, seven years. 130 people on our team in baltimore. just takes time. we now have the number one cleat in the market at $130 which is a cam newton shoe that we made. baseball in '07, training in 08 tate, running in -- now getting excellent in the categories we're doing business in today. >> long term if phil knight called you up tomorrow and said we love your business, we'll
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take it, we'll put a nice premium on it, you can go to the beach, what would you say? >> i have a fiduciary responsibility to my shareholders which includes ron. but my -- >> ron would love that phone call. >> i don't think i would. >> my rule has always been the same. the day that anyone offered me a sum of dollars greater than what i thought the vision or the capability of a company to achieve was, it would be my obligation. it wouldn't be my opinion or choice. and we have such a huge idea of what the company can be. there's it no limit. our goal is to be the greatest athletic sporting brand in the world. >> and he's way underdoes his tributed right now. now he's going into retail for the first time. >> we love our key partners. >> as joe had mentioned earlier, we've been trying to get your reactions to some of the thoughts that erskine bowles and alan simpson and lloyd blankfein had yesterday.
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i want to have you you react to a comment about the economy and some of the uncertainty around what's going on right now. so take a listen. >> as long as we don't bring our spending under control or increase our revenue, we won't have enough resources to invest in education, especially vest in high value added research, to invest in energy or infrastructure. these are the problem areas that we have to face up to. >> when you think about the broader economy, how much do the macro issues play into how you grow your business? >> as a public company, you get measured in four categories, top line, bottom line, margin and inventory. if you write the press lease, how do those father characteristics look. at the end of the day, you can't spend more than you're bringing in. so pretty basic fundamentals that we get measured on on a quarterly basis that i think our public officials should be
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measured on at the same time. and so i don't think the right place for me today in sports is buying in on the political climate as much as we have issues that what we're doing is just generating jobs and building a better company for people and hopefully -- under armour serves a role. what i want people to do is looking at our company and saying this is a company that over the course of 15 years grew to a billion dollars. i want people to say you mean in football player from maryland can do that? yeah, a football player can. so you get out, you've got an idea. progress over perfection. let's get back in the game of entrepreneurship and start building businesses again and investing in our businesses and can doing things with government to support the ability to start those new businesses. >> i have to ask to you weigh in on one last thing.
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if lance armstrong was an endorsee, if you will, would he still be today? >> you have to saupt youpport y athletes. good news is we're just starting. we have so many stories of the new athletes, of the next generations, of cam newton who will come on strong. >> but if one of them has a problem -- >> athletes have problems. that's life. so you have to pick your spots of what you stand for. i don't know all the facts in that case. i think what he has done for cancer research is something that is over and above any of the current issues he has. but that's not our flies weigh. but we wish him the best. cancer affects us all. >> kevin plank, thank you for being here this morning. appreciate it. i'll send it back to you, becky. if you have any cenomments questions, squawk at cnbc.com. when we come back, hotel squawk.
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i love my friend here. i'm not allowed to show letter, but he sent me two letters saying by the way, can you send me some stimulus money for companies here in the state of wisconsin. we sent millions of dollars. >> you did ask -- >> on two occasions, we advocated for constituents
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applying for grants. we do that for all -- >> i love that. this is such a bad program and he writes me a letter saying the reason we need this stimulus, it will create growth and jobs. his words. >> first thing we were able to look at obviously is intrade. two month chart. >> at one point obama's odds were 64.2% were the highest. 62.9 is where it is right now. >> that's why it started. came down from 78, close he to 80. now like we did with the last poll, moth of these things are three day rolling stuff. so i don't think what happened
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that day or yesterday has turned anybody away. >> i didn't watch all of last night, though. >> because of the baseball playoffs. >> no, we got to get up and it was quarter of 10:00 or whatever. i said i'll check tomorrow. >> i think you'll hear more specifics as the debates continue. >> and the new answers of the i i intractable problems. even seeing the differences. >> when we com high i can't tell hotel, are people traveling. plus at the top of the next hour, quarterly results from jpmorgan. we'll have the the numbers and instant reaction. then coming up at 7:15, we have
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david rubenstein, we'll talk the global markets, fiscal cliff, much more. ack and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. overmany discounts to thine customers! safe driver, multi-car, paid in full -- a most fulsome bounty indeed, lord jamie. thou cometh and we thy saveth! what are you doing? we doth offer so many discounts, we have some to spare. oh, you have any of those homeowners' discounts? here we go. thank you. he took my shield, my lady. these are troubling times in the kingdom. more discounts than we knoweth what to do with. now, that's progressive.
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that powers sound decisions. duff & phelps financial advisory and investment banking services. we're back this morning live from the baron conference here in new york at lincoln center and building a business was once the american dream but some fear the dream may not be atenable as
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it once was. tom pritzker, thank you for being here. you have your finger on the pulse of a lot of things all across the economy. i've been talking to ron all morning, he's bullish on just about everything. i wanted to get your sense on where we are given the uncertainty, given the fiscal cliff, given europe, given all these other issues that seem to be out there. >> right, so we have like two realities going on. we've got the business corporate earnings seem to be fine, third quarter's a little bit weak, and you've got governments, not just the u.s., but others, who are generating enormous amounts of debt. i don't think those two can live in two parallel universes and we're going to have a period where we've got to reconcile those two. on the other hand, you've had, i'm sure a lot of people telling you gloom and doom and this sort of thing. i think for the u.s., there are
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real spots of optimism between our energy policy, innovation, the people that we have, i think we've got a great culture and i think over time that will pay off. >> how big an issue is the fiscal cliff in your mind in terms of decision-making that you're doing for your own companies in. >> yep, it's a big issue. we've got uncertainty. why not wait until we see what happens so if you don't have to make a decision, you wait. >> so give me an example of something where you've said we're going to wait. we have to wait this one out. >> i don't know that i had point to a specific example but it's embedded. i had a deal yesterday actually a guy on the phone yesterday offering something interesting, and i sort of pushed it off for a variety of reasons the context of uncertainty, i would say is more relevant than any specific deal that, or decision we're making. >> i think what's really interesting about tom is i've known him since the 19 0s, i
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invested with him and his dad and his father was one of the first people to help me out when i started in the business. you once mentioned to me, fairly recently, said gee, there's not a single business plan we've ever seen that's worked, not one, and then on the other hand you've built -- >> what do you mean by that, i business plan that's not worked. >> nothing ever worked that's supposed to work. >> for my career, my dad was a janitor of lbos and we were doing it in high tax rates, 85% tax rates when i was born and the result of that was you bought a company and you were going to hold it forever. and in addition to that, you decentralized and you relied on your management team. when i got out of school, i wanted to differentiate myself so i started businesses from scratch and my experience is what ron is describing and that is guys would come in with a business plan and it wasn't going to work. the world was going to change
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and when you're small, you better be able to change with the world so what we would look at is the people rather than the business plan, because the experience was business plan was going to change. >> the most amazing thing on this is that here most people send their careers in one business like a hotel guy, but tom has been hotels, he's been casino once, been in the leasing business, been in a health business, been in an industrial business, all of these different businesses, multibillion-dollar businesses from scratch. how'd do you that? >> you want to try to answer the question? it's almost rhetorical in some ways. >> i'll take a shot at it. i think the first most important thing is people, so you remember conrad hilton, three keys to the hotel business, location, location, location. >> right. >> the pritzker corollary is three keys to the hotel business, people, people, people, and i think if there was one element, it's that. >> right.
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you had mentioned taxes just a moment ago in terms of when your dad was doing the business. there's a big question mark about what tax rates are going to look like on personal income and corporate. how big an issue again is that in terms of your decision making in terms of investments? >> i don't think that's critical. what i think is critical is whether we get the country on a solid footing. taxes is one component of it and my own view is whoever ends up being president, what they've got to do is put together a wholistic package that says here's where we're going, and so it's not just the tax issue that's at risk. >> tom pritzker, thank you for being here this morning. appreciate it very much. ron will be back with us for the rest of the program. coming up, quarterly results from jpmorgan and we've got carlyle's david rubenstein. lot more to come on "squawk." smart comes with 8 airbags,e3 a crash management system and the world's only tridion safety cell
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avoiding the fiscal cliff. >> a lot of our problems are self-inflicted and can be self-resolved. >> these are the problem areas we have to face up to. >> we are on the money and focusing in on the issues. another hour at the baron conference with ron baron group and carlyle group co-founder david rubenstein. closing in on election day. >> it's about time they take some responsibility here. >> there aren't enough rich people and small businesses to tax to pay for all their spending. >> wynn resorts chief steve wynn sounds off on the economy and america's business opportunities. and earnings season kicks into high gear. jpmorgan set to report. get the numbers and the instant analysis only here as the second hour of "squawk box" begins right now.
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welcome back to "squawk box," everyone. jpmorgan just out with its earnings and we're going through the numbers but joe looks like it came in better than expected. >> first number we saw was 140 versus 124 and said there was a $900 million or 14 cents aftertax, which theoretically $1.26 versus $1.4. the revenue the street was looking for was 24.531 and i saw a 25 and change number. dimon one of the things most interesting, becky, he said finally in his view, "we believe the housing market has turned the corner." >> that's the key thing one of the analysts we spoke with yesterday was telling us, you look to it to find out about housing and bonds.
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if house something turning the corner, jpmorgan is one place that would know it. >> if you just want a net income number and why would i give you that, $5.7 billion because we all put it in the prism of the whale, that was 6, 7. >> some people say 8, some say 6. woo. >> in a quarter, $5.7 billion is, that's a real number obviously, billions add up, multiply by four and you can see what earnings power the bank still has. yesterday the analysts talked to us about all the different components and whether they'd be strong or weak and equity was going to be weak because of the, i don't know, the weakness in i guess volume, she said to look at bond trading as well and that would be indicative of how the quarter went. investment banking revenue 6.28 billion, commercial banking 1.73, card service revenue 4.7.
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their provision for credit losses which people look at in the quarter was $1.8 billion. at this point the stock is up handily. it closed at 42.10, the bid is 42.53. the ask is 42.75. so on the bid it's up about 44 cents. we do want to know -- okay, we have nonperforming assets, total 12.5 billion. the absolute level according to dimon of the absolute level of chargeoffs remains elevated. >> with that he's talking about in the mortgage banking even though they've seen this turn in the housing market they say the absolute level of chargeoffs remains elevated. we're not into clear sailing at this point. >> it expects to see high default related expenses for a while longer. for a while longer. they probably won't say we added
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this much back in, in terms of reserves, right, that they took and how that benefited? we're going to have to actually go in and figure that out or an analyst. >> other than the 14 cents? >> is that what they're talking about? that's what that was for, the 900 million they brought back from reserves? >> the 900 million they brought back from reserves was from the housing reserves. >> that i wouldn't even say that you back that out. i would say you leave it at 1.40 then. >> 900 from reduced lost mortgage loan reserves. >> is that the portfolio, they'll bring other reserves back? >> 825 million in pre-tax incremental chargeoff, that's 13 cents a share aftertax because of regulatory guidance on certain residential loans and real estate portfolios, there are some other moving pieces here. >> if you leave the 14 in, and you -- >> if you leave the 13 in and get rid of this, there's another 14 cents increase. >> still 1.40. >> and 11 cent increase. there's 14, 13, 14, 11.
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>> i want to break these banks up. they're too big to analyze. >> make our lives too complicated. >> i don't know if they're too big to fail but they're too big to report. we need kernen-quick. >> now regulation? >> yes, too big to analyze. >> 14 after tax increase, 13 aftertax decrease. 11 decrease so that's 28 -- >> you got smacked when you reserved it. when you bring it back, i'd leave it in. >> that's one thing the street may not have looked too fairly because jpmorgan was aggressive in terms of the amount they were taking off reserves, they got punished at that point. you'd think they'd get credit for bringing it back as it comes through. it will work its way out in something, but 28 and 24, so 28 plus, 24 minus, i don't know, they came in close to expectations. i don't know which the analysts
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knew. >> here's some market talk the analysts got increasingly bullish on jpmorgan since the second quarter, boosting consensus estimates by 17% but it still wasn't enough to get to how the stock or the company outperformed and 42.75 as you can see is now the -- closed at 42.10. >> that is a little bit of help to wells fargo who will be reporting an hour from now, wells fargo indicated slightly higher, anybody who will be actively involved in housing will get a bounce from this. >> we'll hear more about the numbers and top of the hour, wells fargo is trading higher on chimp thee. chris whalen, from tangent capital partners, he'll discuss jpmorgan and wells fargo and he never sugar coats it. >> no, he doesn't. that's not all we have in store. also andrew ross sorkin as you know is at the baron conference in new york this morning, joined
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by ron baron of baron capital. also joining andrew and ron in about 15 minutes is david rubenstein, co-founder of the carlyle group and bottom of the hour, steve wynn, ceo of wynn resorts will be joining the group. he's been critical of the obama administration's handling of the economy. ron baron has been a partner from the beginning so we'll get a chance to hear about all of that. all right at odds early and often, the two, joe biden and paul ryan fought over taxes, foreign policy and more in last night's vice presidential debate. there was laughing, there was smirking, there was interrupting, there were attacks from both sides, the democrats were looking for a spark from the vice president, while the republicans looked to capitalize on the momentum gain from mitt romney's first presidential debate, taxes were a driving force behind the economic portion of the debate. >> there aren't enough rich people and small businesses to tax to pay for all their
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spending, and so the next time you hear them say don't worry about it, we'll get a few wealthy people to pay their fair share, watch out, middle class, the tax bill's coming to you. >> we're arguing that the bush tax cuts for the wealthy should be allowed to expire. of the bush tax cuts for the wealthy, $800 billion of that goes to people making a million of $1 million. just let taxes expire like they're supposed to on those millionaires. we can't afford $800 billion going to people making a minimum of $1 million. >> see, $800 million billion, i need scientific notation. >> he corrected himself as he was talking. >> no -- did he? didn't that sound bad? if you want to do $800 million billion but put in scientific notation, eight times ten to the -- you do the billion is
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nine and then million is six so i think it would be to the 15th. do you guys, is that right do you know? that's right. >> we have some guests here, a.j. and akshay watching, we appreciate that. >> he should have said eight times ten to the 15th although i don't know if joe is quick with the scientific notation. >> i can tell you i'm definitely not. i'm trying to follow along. >> one other comment is not everything, not every word out of paul ryan's mouth was absolutely ridiculously laughable, and if you laugh at every single word, even, excuse me, or whatever, it just, you lose sort of the -- >> that point was made on twitter last night. >> you can't laugh at every single -- >> that was one of the things that got picked up on. >> was everything he said just off the wall ridiculous, paul ryan? >> no, but biden was there to be more aggressive, and to try and fire up the base again. >> right.
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>> and i don't know if the laughing worked as much but it was his energy. >> it seemeded to, one of the campaign guys for the administration i know it's going to be a "saturday night live" routine but we're really glad with the way it went. i guarantee he was back there going, joe, joe, joe, just -- i guarantee you he was going like that. do we have an ifb, does he have an ifb? did he know there were two shots? >> i saw that very phrase tweeted. did he know there were two cameras that he was on the side shots? >> because i've learned if i'm going to pick it's not going to be here or anything, it's a smile. >> we never make ourselves look ridiculous. i've gotten caught doing some pretty -- >> all right, i know, move on. the u.s. is headed towards a fiscal disaster. no one in washington seems to be doing anything about it. that was the call yesterday from the authors of the simpson-bowles deficit reform plan and goldman sachs ceo lloyd blankfein.
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erskine bowles lending some advice to president obama. >> lead from the front. just take on this enormous problem we have with economic growth, the best way to take that on is to reform the tax code, to broaden the base, to simplify the code, to wipe out these tax expenditures and use that money to reduce rates, to encourage growth and also to bring down the deficit. that's really tax fees entitlement problems. >> alan simpson and lloyd blankfein spoke about the need for compromise in washington own an wall street. >> if you can't learn to compromise an issue without compromising yourself you sure shouldn't be in congress. in fact you shouldn't even get married. if you can't learn to compromise you shouldn't be in your business or his business. >> you shouldn't go to congress needing to learn to compromise. politics is the definition of politics is the art of getting things done. you should be elected for being
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willing and able of compromising in the first place. >> when it comes to the issue of the fiscal cliff and the economy lloyd blankfein also added this. >> we may get through the fiscal cliff by deferring it or by having something where, in the long run, it's not sustainable because our budget deficit will keep growing wider and wider n which case the people who have to make decisions won't regard it as a real long-term solution. what we really need to do is fix the economy of the united states on a sustainable basis so there's some predictability so people don't stand on the sidelines and so they go and invest and so jobs get created. >> you know, blankfein also added that he thinks if there is a credible solution that comes out of washington, that you will see a huge pop in the markets, that they would take this as a sign of success. >> maybe more than a pop, maybe actually we'll get back into a steady rise. >> get rid of the uncertainty, understand what's coming for years down the road, have a real game plan, a real road map for what's happening.
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what surprised me more than anything was erskine bowles, liesman asked him, what are the odds you think about us going off the fiscal cliff and personally, i've thought there's got to be some way they reach a solution. lot of people in the market probably thought this way. he says 30 to 35% chance that there's not a solution and that there's not a solution immediately afterwards. he kind of split it down to a third, that there's a solution before, a third there's a solution right after and a third that we don't get anything any time soon. >> i disagreed with some of the stuff alan simpson said, don't get married if you're not willing to compromised. i've never compromised at all. >> because you listen to what your wife says. smart man, my contract originally said, happy wife, happy life. >> that's what i mean, it's fine. i don't expect a compromise, i don't expect to get anything. >> you are a smart man. >> so is your husband. comments or questions about anything you see on "squawk"
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e-mail us at squawk@cnbc.com. and follow us on twitte twitter @squawkcnbc is the handle. andrew is in new york and you have a lot of big guests come. >> thanks, becky. coming up next we have the co-founder of the carlyle group david rubenstein will join us to talk about the fiscal cliff and what he says the president's economic plan is or isn't in terms of being anti-business. "squawk box" is coming back from the baron investing conference right here in new york after this. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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i'd be a buyer of the market. goldman sachs would, you know, not only advisers, we're companies ourselves. we would be assuming that our business would grow, that companies would be making more acquisitions, making more investments that we would be doing more financings and we would have to get the people on board to make sure that we were able to provide those advice and those services. >> that was goldman sachs' coo lloyd blankfein speaking to steve liesman in an exclusive interview yesterday. today we have joining us here to talk about whether he's a buyer of this market, like lloyd bank fine, david rubenstein, the co-founder of carlyle group, managing director and we're thrilled to have you here. also a huge investment of this gentleman, ron baron. >> well my pleasure to be here and ron i appreciate your
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support when we were going public. >> look, right now in the world of private there is what they call $1 trillion of dry powder just waiting to be used. do you expect in this environment with all of the uncertainty, the fiscal cliff, all of the issues we've been talking about all morning, that you can actually put all that money to work? >> for one, it's $1 trillion has been there for quite some time. it's not all of a sudden $1 trillion. it's been there for five, six, seven years so you typically have $800 million to $1 trillion of dry powder. the uncertainty is a good thing for private equity investments. you make the most of your money when you're doing things in uncertain environments so disique qudi disequilibrium is something people like us like. >> he doesn't seem to buy that the fiscal cliff is a big issue. i don't want to overstate it. >> it's a big issue. i think it's going to be resolved. i think everyone sooner or later
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does what's in their best interest, to resolve this problem. >> how are all of these issues, europe, china slowdown, fiscal cliff, what's going to happen to taxes, how is that impacting the way you're think being it. >> in any given period of time over the last 100 years there's always certain issues and if you didn't do anything because there are certain issues like the fiscal cliff you wouldn't do anything, you'd be frozen. the fiscal cliff will be resolved, probably won't be resolved in the lame duck session but probably early in the next congress, the new president will probably work with congress to get a deal that will probably resolve those issues for a while. >> earnings are coming down, the imf came out with a report saying we're having a slowdown. do you feel it? do you see that? >> i think it depends on what part of the world we're talking about. the united states we're growing modestly, probably grow maybe 2% this year, europe obviously slowed down, the emerging markets are decelerating a bit but on the other hand there are good things to buy and we do find plenty of activity for us to do. >> so david, we have a man
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running for president who is a private equity person background. people don't know what private equity is. what the heck is private eq? why don't you tell us. >> private equity is a way of investing trying to buy companies that have problems that need to be fixed up or improved in some ways. you spend four to five years doing so and ultimately the result is a good return for the investors often who work public pension funds. >> look at the return and the way it's received. >> you watched the debates last night. >> i did. >> i'm kourious on your thuts a. >> it was certainly more animated than the first debate. typically vice presidential debates don't move the needle so probably isn't going to change anybody's views on anything but it was entertaining. >>joe kernen is in studio, i think he has a question for you. >> hi, david. >> hi. >> back to private equity and the way it works. you have underperforming companies, you guys come in and we're going to try to make them perform better and compete globally. unfortunately with how much it
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costs sometimes to do things in this country versus offshoring, what do we need to do policy wise or tax wise to be able to improve company, for a private equity company to improve one of its assets by keeping jobs here and keeping it domestic. what do we need tax policy ways wise to do that? >> obviously certainty is the most important thing so knowing what the tax policy is going to be in the next couple of years would be helpful, certain incentives would also be valuable but i think it's worth pointing out that manufacturing is coming back to the united states. we're seeing manufacturing growing at a faster pace than we're seeing the unemployment grow. we've been buying a lot of companies in the manufacturing area in the united states like dupont coatings recently or the sunoco refinery. we think there are opportunities to manufacture here at lower prices than people thought was the case. >> i was going to ask you this, when you think about simps simpson-bowles and the tax
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proposals, one of the things that happens invariably, taxes on capital gains at some level go up. what does that mean for both of you? >> well, capital gains is, was designed to encourage people to invest. it was always thought that investing is good, it's going to create jobs so capital gains differential is existing in every country in the world. most countries have a zero capital gains rate. differential is appropriate i think. >> what do you think the right differential is? >> well, that's in the eye of the beholder but i think it's at a point probably somewhere around where it is now and maybe a slightly higher, probably see a slightly higher capital gains rate in the next tax reform but somewhere below where it has been the last decade or so. >> that's got to be an issue you think about. >> i think that, well my whole career the tax rate for capital gains has gone up and down fairly significantly. i've been doing this since 1970 to so it has changed a great deal, it's an attractive rate right now. i think if you can say we're
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going to pay a little bit more in capital gains tax and give less entitlements to make expenditures so they'll be more sustainable, i think that would be a big positive. >> the business community wants the debt and deficit issues involved. they'd say generally if the capital gains rate has to go up as a consequence to make sure we can have a sound fiscal policy and sound financial policy that would be a good thing. i don't think we should eliminate the differential. >> would there have to be some grand bargain? >> absolutely. i don't think it will happen in the lame duck. i don't see in that short period of time getting done. it would be helpful but i don't think it will get done. >> do you have a view whoever wins how it impacts the economy. we have people come on say if romney wins it's better for the economy, if obama wins it's better for the economy. >> there are pluses and minuses on each side. the next president has to resolve the uncertainty on the debt and deficit.
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they need to get together with leadership of both parties and recognize the country cannot continue to have $16 trillion of debt and $1.3 trillion annual deficit. >> final question on the topic of deals, we've seen a number of big deals, what's the biggest deal that the private equity community can do these days? >> well if it's just private equity firms i suspect nothing probably bigger than $10 billion, the last few, nothing bigger than $5 billion to $7 billion. $10 billion might be the outer range. with the strategic you can do a larger deal. >> and no more consortiums. there's a lawsuit out there that talks about not coercion but grouping together. >> sometimes people get together because they add value to each other and i think there will be some deals where people get together. i don't know, there will be five and six companies coming together not because of the lawsuit but the size of the deals that you're likely able to do now. >> david rubenstein of the carlyle group thank you for being here. >> my pleasure.
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>> joe, back to you, my friend. >> all right, now, "my friend" is a loaded term now after watching that debate. >> that's true and by the way i was not thinking that at all. >> you know what, the age difference, i was thinking it was about the same but it's not quite the same, andrew. 69 and 42. >> 69 and 42. yes. no. >> coming up in a moment, steve wynn has been critical of the obama administration's handling of the economy, hypercritical, even passing on a $2 billion project that would have created 35,000 jobs because he, in his words, is afraid of the president and the way he thinks. he is our special guest, starting at 7:30. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
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between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot
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that powers sound decisions. duff & phelps financial advisory and investment banking services. comments, questions? send them to @squawkcnbc on twitter. follow the show, and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc and on twitter. when we return, we will be joined by steve wynn. he's going to talk to us about building a business and what it takes. this is a man who knows how to do that. he'll sound off on the race for the white house and still to come, we have heard from jpmorgan this morning. we're still awaiting wells fargo, that will be out at the top of the hour. jpmorgan up after it came in
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with better than expected numbers. we'll have the numbers and the instant reaction for wells fargo, that is just ahead. a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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with the blackish-blue frame and the white dots and the splattered paint pattern, your lights are on. what? [ male announcer ] the endlessly customizable 2013 smart.
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welcome back to "squawk box," in the headline this is morning, jpmorgan chase is reporting third quarter earnings of $1.40 a share, estimates were $1.24. the $1.w40 includes noise and items including $211 million of so-called debit value adjustments and some reserves came back in, but revenue also beat the consensus and the stock continues to trade up a little bit on the news, and it's inspiring at wells fargo to do the same and we'll get results from wells fargo as well. the video game slump continues but not in my house. npd group says industry sales fell 24% in september, from a year earlier and that is the tenth consecutive month of declining sales. sales though are expected to get a boost when nintendo's new version of the wii comes out
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next month. wii, wii, wii. >> wii, too. wii, wii. >> smo. ch mon cheri cat. we're an our away from ppi, economists looking for an 8% rise in the -- >> ppi -- >> in the food and energy rising up 2%. >> former white house chief of staff and deficit commission co-chairman erskine bowles echoed what many business leaders feel when it comes to the economy and wash warm. >> the american people are way ahead of the politicians. >> way ahead. >> way ahead. they know we've got a problem and want the politicians to stand up and get the job done, for generations we've asked our politicians to bring home the bacon. well the big is dead. >> joining us now is a business leader who has been critical of washington and the administration and also a man
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who knows how to build a business, steve wynn, who is wynn resorts chairman and ceo. it is a pleasure to have you with us today. i realize there may be a bit of a delay because you're in germany so i'll try to get this question out without stepping on your answers right out of the bat. you are somebody who knows how to build a business. you started out back in 1980, ron baron was one of your initial investors. what did it take to build a business then and what's the environment today in terms of whether or not you think it could be done again. >> i can't see you, but -- [ speaking in foreign language ] or "through the window i'm looking at the rhine river in dusseldorf" and it's beautiful. did you say what's it take to build a business today? >> that's right. >> is that the question? well, a lot of courage i think under the circumstances.
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lot of uncertainty and the promise of outrageous tax increases and increases in the cost of doing business that are totally unnecessary and irrelevant. it's part of the static that's been generated by washington today that's confounding everybody. >> you know, we've been talking an awful lot about bowle bowles-simpson, you need compromise on both sides of the aisle so businesses know what to expect in terms of taxes and incentives. do you agree with that? >> well you say there's been trouble on both sides of the aisle and the house did send budgets, the president sent a budget to the senate. we must remember he was voted down by his own party 97-0, the
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president. that's not quite the same on both sides of the aisle if you ask me. i think the picture is worse than that. it isn't as simple as just a difference between two parties. we've had suggestions and stuff submitted to congress that no one believes in, and that presents a different kind of problem. i heard rubenstein, david and i served on the kennedy center board just before me say that no matter how the election turns out, there are pluses and minuses. he's the chairman of the kennedy center. i served on the board with him and he's politically correct, i suppose, but i don't think that's very accurate. i think if you believe that romney is going to win the election, you should go long on the stock market. >> steve, i didn't know this, you're quoted here as a long time democrat, which i think is something to point out that it's not just a partisan thing that
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you're doing here. one thing i want to ask you, because you are quoted earlier this week saying some of obama's crazy anti-business programs are getting in the way of creating jobs. lot of times his critics on the left say he's been too nice to business, and that he's actually curried favor and bailed out wall street and not main street. what crazy anti-business programs are you talking about specifically? >> well, certainly obama care. i've been a health care provider for 45 years and i have a clear idea of how to improve health insurance. none of those things were in the bill, 2,700 pages that no one read, not the white house, not the house or the senate. 2,700 pages that didn't get the job done. we should have a very vigorous
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interstate insurance business. when you take a break on cnbc, we're going to see a geico versus all state versus progressive fighting for car insurance and the price goes down. you'll see vonage fighting with at&t and with verizon, and the price of cell service goes down. you don't see that with health insurance. that is one thing that could have been done. i've insured my employees for 45 years, we've been an insurance company and defensive testing is driving our health costs up, and the doctors are doing defensive testing because of unbridled plaintiffs attorneys bringing frivolous lawsuits. any control on that is missing in the 2,700 pages, when texas and other states have limited punitive damages on health care, malpractice insurance premiums dropped by 40% and 50% in one
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year and defensive testing has been reduced dramatically, and consequently the concomitant costs of health care. the obama health care bill, as nancy pelosi said, we need to pass it so we can find out what's in it. they may have been willing to let the american public be a guinea pig for obama care, but the house of representatives and the senate under pelosi and harry immediately exempted themselves from obama care. that is the kind of government that's crazy. if you want me to go on, i'll give you another example. the president's employment bill, the president's employment bill had provision 2a that i read myself that said it shall be an unlawful employment practice for any employment agency or any employer to fail to hire or to refer for hiring any person based upon their status as unemployed, and such unlawful
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practice in 2b would have been a violation of the civil rights act of 1964, and the equal employment opportunity act. those things would have immediately discouraged anybody from hiring anyone because they would have been sued no matter what. this kind of stuff is outrageously bad government by any standard whether you're a democrat or republican. it doesn't make any sense. >> steve, ron baron is standing by. he's been a long-term investor and he's got a question for you as well. ron? >> hi, steve. thanks for coming on the show. >> hi, ron. it's a pleasure. nice to see you. >> great to see you, too. so i've been friends with steve and i have invested with steve since 1980 and we were one of the first investors, one of the first three investors in wynn resorts in 19 -- in 2001, 2000-2001, market cap was then $1 billion. and one of the things that was
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interesting to me, we went out to visit you and we stayed in your home that night and went to a show at the bellagio and we were talking through the bellagio and we saw one person after another who worked there would keep coming up to you saying "mr. wynn, mr. wynn, i've worked for you my whole career. when you start your new business in las vegas i want to come work for you." one of the questions becky started off was mr. wynn, steve, how do you start a business. when i was talking with you the other day, i was asking you how do you manage a business and how do you start a business. one of the things you've told me all the time and always told me about is the customer experience, so the customer experience and the employee relationships that you have, how do you build those? why do they do that? why are they so loyal to you? >> well, first of all, ron, it's nice of you to remember the first thing you want to remember is that the most important things for employee are to feel good about themselves, feel good
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about the enterprise and most of all feel safe. that's one of the reasons why i've been so involved with politics, is that my employees are not feeling safe, they're not feeling good about their situation at home, and without a workforce that is on the same page, you know, if you can make people that work for you have an increase in their self-esteem because of something that happens at work, then you've harnessed the ultimate energy that you could possibly have. it's more important than money, actually, so we work very hard on the customer experience by virtue of dealing with our employees. only people make people happy, and so my idea of marketing is to concentrate on the staff that touches the public in the hotel, and that can probably explain to you why i've become so concerned about what's happening in washington because it's affecting the living standard of my employees, they're all filled with anxiety these days, they're
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noticing in their homes no matter what their political or skin color or anything else is, that their paychecks are shrinking in real time because of government irresponsibility and the management of this deficit. it's killing the living standard of my employees, and that immediately affects their attitude at work, so one of my really threshold issues is being threatened. >> hey, steve, i did a quick calculation, i don't know if it's right, but you figure you've created 250,000 jobs in nevada over your lifetime. i looked at, i just quickly think of the way that government does it. $800 billion, 5 million jobs, that would be 160,000 per job that it cost but the federal reserve says it created 2 million, so i'm only giving 3 million to the $800 billion, that's almost $300,000 per job. when you create a job, suddenly you're also creating market cap for your shareholders.
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i tried to add up mirage plus wynn, then i think all those employees are also paying taxes to the government, and i look at the multiplier of a private job versus what the government can do and it's mind boggling. >> it sure is. it would be wonderful if you could repeat that to president obama because his lack of experience in the real world is causing this problem. anybody that had any experience in business would immediately understand these fundamental relationships, and they would behave accordingly. it's one of its reasons why this time, i think that romney is a perfect guy. he's had success in business. he's a great picker of people. one of the things the president has to have is a rolodex, not just george clooney, he has to have a rolodex of other people who know how to pick people and manage business, and also as
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people have said on this program it's very important to be able to reach across the aisle and find consensus. i like romney because he did that in massachusetts. i'm in dusseldorf looking at a particular piece of technology for a show, with kenny ortega who ran the opening and closing ceremonies of the olympics in salt lake and for two years he worked with mitt and told me he was a great listener, he made decisions, he attracted an all-star team and produced a great result in salt lake city. these are the kind of things that are missing in our government. somebody who has the experience on how to understand people, how to pick people, and get a result that's based upon reality, and when you're building a business you try, if you're a leader, you try and harness simple truths. the simple truth is that everybody in the world wants a better life and the only thing
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historically that's ever proven to provide a better life is the demand for our labor. the gang of you at cnbc, myself, everybody else, the more demand there is for our labor, the better our life, the less demand for our labor, until there is no demand for our labor and we starve. the purpose of government is to create an environment where the demand for our labor is constantly growing. that's the simple purpose of life, and to take the money out of society, filter it through a bureaucratic government, have it diluted by waste and inefficiency by 20%, 30% or 40% and then decide to give it back, that's a mistake. if you want to be in the private equity business, go in the private equity business, like the carlyle group. if you want to be in the government, reward socially beneficial behavior. if you want teachers, forget about unions and everything else, don't raise property taxes. just tell teachers, if you get
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your kids to pass a test and prove to the mothers and fathers in the community that the kid has learned math or spanish or english or history, then that teacher gets a tax break for a joint tax return of maybe $75,000 a year, that would give a whole bunch of people a chance to go into teaching. my idea in business is the more intelligent people you get to address a problem, the more likely you are to get a successful solution. what i think the government should be doing with education is to encourage teachers by giving tax breaks to teachers who have their students prove that they've learned something. that way we don't interfere with unions, we don't interfere with local communities. we let the ptas and the teachers, and the teachers can decide voluntarily whether to give their kids a test or not. that kind of rewarding socially desirable behavior applies to energy. i wouldn't be giving money to
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solyndra or fiskar. i would tell a car company you build a car that uses less or no fossil fuel, you get the money privately and promise your investors that if the car is successful, if it sells with private capital, then the profits on that investment will be enhanced for your investors because we'll give you a tax break on your corporate tax if you can make a car like that. that's the thing that's missing in this government, a fundamental understanding of how to reward proper behavior. tax policy in america can cause people to behave in any desirable way, increase taxes and all you do is kill incentive and kill investment. i think that's my thinking on the subject. >> steve, we want to thank you very much for your time today. again, steve wynn, who has been joining us from germany today, we realize there's a delay, but we really appreciate your time. thank you, and thanks to ron baron for bringing him too. >> it was a delay but finally
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arrived here loud and clear. i don't know, anyway. when we come back we'll have quarterly results from wells fargo that are out in just about 11 minutes from now, plus jpmorgan is just beginning a conference call with journalists. our earnings team is taking part and we'll give you the headlines as they hit. first we head to a break and take a look at the dow futures up by 40 points above fair value, this comes after slight losses for the s&p, the dow and the nasdaq yesterday. tgif. at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade. [ male announcer ] how do you make 70,000 trades a second...
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still to come, earnings from wells fargo, plus our "what's working now" series concludes with a fund manager who has outperformed the s&p 500 over the past ten years. and then tea party reaction to last night's vice presidential debate. freedomworks co-chair dick ar y armey, all this plus market moving news in the next hour of "squawk box." at optionsxpress we're all about options trading.
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the guys who are working around and putting it aside are going to make it, holy smokes, guys believe honestly no congress could be this stupid and by god, they can. >> that was alan simpson yesterday on cnbc talking about the fiscal cliff. our guest host all morning has been ron baron, and we are here at the baron conference at lincoln center. i want to get final thoughts from you in particular about the fiscal cliff. we're making a big deal of it. i gather you don't think it's such a big deal. >> i think it is a big deal, i was discouraged when i listened to alan simpson saying the congress couldn't be that stupid
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and actually they are that stupid, i don't believe it. i think sooner or later people do what's in the best interest and the best interest is to fix it. what's important and what i was interested in showing you today were executives who started their businesses and the reason they did is because of this country, they were able to do it because of this country, started from nothing, steve wynn built wynn resorts, david rubenstein, the carlyle droop. >> can be done again today? >> absolutely. doing this every day. every day companies visit us that are interesting to invest in, people start themselves, entrepreneurs find niches, find opportunities. but people like kevin plank, you see them and you can't miss them and you see tommy pritzker. >> ron baron, thank you for having us today. you give us hope where businesses can really go. i'll send it back to you becky. >> andrew, thank you, great stuff from you and ron. when we come back, wells fargo earnings and former house
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we'll break down reports from wells fargo and jpmorgan and chris whalen will be here to analyze the financials. >> the tea party's take on congressman ryan's debate performance. >> the next time you hear them say don't worry about it, we'll get a few wealthy people to pay their fair share. watch out middle class, the tax burden is coming to you. >> dick armey joins us for a strategy session post debate. and portfolio picks from dennis stattman, who managing blackrock's global allocation fund with annualized returns above 11% over the last ten years. the third hour of "squawk box" begins right now. welcome back, everybody. "squawk box" here on cnbc, i'm becky quick, this is joe kernen. wells fargo hitting taken looks like it came in a penny better than expected, joe?
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>> 88 versus -- >> 87 was the estimate. >> revenue 21.2 billion which is below where thompson reuters was and first call was 21.4. the stock now is just off a little, 35.18, it's now 34.90 to 35. chris whalen is here, he'll be able to help us with this. chris i've already said that these banks are too big to analyze. we need to break them up, not too big to fail but too big for to us do quickly on "squawk box". they're hard to quickly return on equity was 13.38%, that was up 52 basis points. tier one common equity ratio 10.06. >> what was revenue growth? sounds like it was off. >> i could probably get you a year ago. >> the street had them estimated
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up eight and change and sounds like they missed on the revenue side. >> revenue came in at 21.2 versus the 21.46 that had been expected a year ago, it was 20.6. >> kind of interesting. >> net chargeoffs 2.4 billion. that's down. the total loans up 7.4 billion at 782? >> it was interesting, people thought that wells still had a pretty good backlog in terms of mortgage and they were expecting revenue to be up. that's why wells and u.s. bank are the two members of the top five driving revenue and earnings mostly by taking share away from the other banks. the other three of the largest banks stepped back from mortgages. you see jp had a pretty good number on that line, so it's interesting that wells is coming in this way for revenue. we're going to have to dig into that number and find out why. >> the housing market improving in many parts of the nation. >> they have almost 40% residential market share and all of that's going to the fha. >> one question, though, and that's not going to be reflected
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in this release with these numbers. we did see in the last week that the u.s. government is going after them for those things. is that going to make them pull back? >> it's millions, not billions like jamie dimon and bear stearns. >> my biggest question has been will that make the banks step away from making the loans in the future? >> no, but carmela harris the attorney general in california certainly will. she took the explicit structure and embedded it in california law with the help of the trial lawyers so that if they make a mistake in servicing your loan you can sue them, and they have to pay for the litigation, by the way, the defendant has to pay legal expenses. this is common in california. >> so california is a big marketplace. >> i think it's very interesting. the u.s. government's already looking at having different servicing fees for different states, for example, judicial state where you can't foreclose. well that problem is the same for fannie and freddie as it is for a bank and if they can't get
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a hold of collateral on a loan, do you want to write production in that state, do you want to have different servicing fees and california is a nightmare. most people in the industry today do not understand what she's done. let me give you another example. say you get foreclosed in california. year goes by, house prices go up, you as the former debtor go back and sue the lender for personal injury under california law and most banks do not understand this. >> one comment the cfo at wells fargo tim sloan made comments. he pointed out the economic and interest rate environments continue to present challenges for us in our industry. what do you think about the financials? >> they made less, the net interest margins shrunk. >> and same with jp, that was the set of numbers i got to look at before we started today, is that you're seeing a 10 to 20 basis point deterioration in net interest margin each quarter. we're not at the lows. in 2008 we were around 3% but if the fed stays with current policy as they're suggesting
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through 2015 we could see net interest margin well below 3%. >> is it possible to even try to group them together in one way and call them the banks? they're so different. >> wells is a much simpler model, less wall street expos e exposure. >> we don't look for trading and bonds. >> no, and you see it in the valuation, whereas there's much more uncertainty with jpmorgan and much less visibility on revenues, we made it with trading again this quarter. you really can't see that as an analyst. you don't know, so it's reflected in the valuation. >> wells fargo is trading down about 2.25%. does that make sense to you? >> i think people realize that the bloom is off the rose and between the two, the twin nightmares of dodd-frank and basel three which are going to reduce leverage, reduce economic growth and then you have just the end of the story in a sense because banks are running out of good customers. if you want to get a guarantee from uncle sam you're talking
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about a $7.40 fica, 80/20 conventional mortgage. >> i thought dodd frank was great for the big banks, terrible for the small banks. bad for both? >> sheila bair did an interview with american banker. she said we need a dodd-frank, parts of it. if we could have been a night at the opera and ripped it off at page 160 and left the rest of it out, we authority for banks, to force them to do a voluntary chapter 11. nobody wants to do dodd-frank, that's the point of it but the rest of dodd-frank is a nightmare and it will hurt housing and growth. >> andrew, we haven't gotten the chance, andrew is there standing by? andrew, we haven't gotten the chance to talk to you about any of these financials today with the earnings to get your thoughts on them and i don't know if you saw "the financial times" today but we were talking about a story on the front page there a little bit about how the headline is, geithner chooses fink as key phone-a-friend,
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talked about how he talks to larry fink more than just about anybody else on wall street. >> right. >> we were trying to figure out if that's signaling that larry fink could be someone they're looking at as a potential treasury secretary. you got any thoughts on any of this stuff? >> i have been looking at that. that story in particular was perhaps the most intriguing. i'm not sure by the way as much as larry fink i think would probably like to have the job, i'm not sure that no matter, well, i don't know whoever becomes the president is necessarily going to take a wall street guy. he's probably the closest thing to not being a wall street guy but i that's very tough. the other implication of "the financial times" story was this idea that somehow potentially and you've heard this before, blackrock rather would be too close to the government, and has been this sort of adviser, and in this day and age it's very odd. you almost don't want to be too close to the government because
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of all the questions that get raised. in fact we were talking about that article a little bit earlier. >> could they get any closer? come on, they're already very close to the government. i think we're already there, but the funny thing is this, bob ruben and tim geithner spend a lot of time on the phone. i wonder if this is an affiliation of the ruben political group. >> go ahead. >> i guess my biggest question is, they may not want someone from wall street, but we live in a pretty complicated time and with everything that could happen in europe, i just wonder if you really want someone who understands the markets and understands the implications of what would be happening. >> oh, i agree with you completely. what i was going to say just now is i think it's ridiculous and i have to think this, that the treasury secretary should be talking to people on wall street. they should be talking to people in the markets and they should probably be doing it relatively constantly. but for some reason -- that's the issue, the problem is in this day and age the second you
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see call logs from a wall street ceo to the treasury secretary, you know, everybody screams conspiracy. >> well, no, but when you were talking about the guy running citigroup and he and geithner talking every day when tim was at the fed at new york there is a problem there, the. the of the fed is supposed to focus on monetary policy. he's not supposed to have anything to do with bank supervision. >> who is the best non-wall street treasury secretary? we had a railroad guy -- >> the industry hated him, they ran him out of washington. >> paul. and then well ruben is the one, and larry summers was not a wall street guy. subset of the ruben. >> i'm not aware of the other names. >> private industry, commerce, right? >> you should have people from wall street, there's no question. i totally agree with andrew but we have to be sensitive to conflicts and most of the firms
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have conflicts have conflicts with washington. blackrock, pimco. >> pimpco, did you say that in. >> no, pimco, sorry. >> i heard that. >> no, no. >> roger altman is somebody who comes from a boutique, maybe that's different but he certainly understands. >> as long as they can add and subtract it's all good. we need independent -- >> i don't know, i think you need somebody to understands. >> people who understand the fiscal issues and not afraid to restructure when we have to do it. that's what's hurting our economy right now, if we don't have growth in credit, if we don't make assets really drive credit expansion, we're not going to have job growth. if you want to look at romney, what is the one thing he should do in the next debate? he should go after the fed and talk about savers in individuals and corporations and rebalancing policy a little bit. >> they wouldn't be able to accuse him of not having done that.
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he's also said he's getting rid of bernanke day one. >> you packed the fed with neokeynesian socialists who don't understand housing is the major conduit for policy. if two-thirds of the country can't get refinanced right now, obviously policy is ineffective and they don't want to deal with this and start with bank of america. i'd put something on zero hedge, i want a big fund to come me to do a hostile takeover of bank of america, restructure it and make money. if you have the vision you can create value and all of the sudden the bank is supporting growth again. >> thank you, we appreciate it. neokeynesian -- >> socialist. >> socialist. i may use that. >> paul krugman. >> yeah. >> let's look at the markets this morning, you'll see the u.s. equity futures are indicated higher, dow futures up by about 42 points, where we've been through much of the morning. we have the two financials who reported the two big banks, morguen is indicated slightly higher. you look at wells fargo it is
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indicated lower after the numbers, we'll see how it shakes out. in asia, as you see, the hang seng did close up by 0.6%. you saw japan slightly lower, korea slightly higher and in europe right now, it looks like very similar trend to what we're seeing actually there, they're looking at slightly negative arrows, france, germany, london, all just barely down. also a call for compromise from the authors of the simpson-bowles deficit reform plan and goldman sachs ceo lloyd blankfein in an exclusive interview with steve liesman yesterday, retired senator alan simpson and goldman sachs lloyd blankfein said compromise is crucial to avoiding fiscal disaster. >> and if you can't learn to compromise an issue without compromising yourself, you sure shouldn't be in congress. in fact you shouldn't even get married. if you can't learn to compromise you shouldn't be in your business or his business and that's where we are. >> you shouldn't go to congress needing to learn to compromise. politics is, the definition of
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politics is the art of getting things done. you should be elected for being willing and being able and capable of compromising in the first place. >> three men came with more than just calls for action. erskine bowles had specific suggestions for president obama on the economic recovery. >> lead from the front. just take on this enormous problem we have with economic growth, the best way to take that on is to reform the tax code, to broaden the base, simplify the code, to wipe out these tax expenditures and use that money to reduce rates, to encourage growth, and also to bring down the deficit. that's really tax fees and entitlement problems. >> steve liesman will join us at the bottom of the hour to talk about the message from bowles, blankfein and simpson. it is heating up as we get closer to the election. andrew? thank you. andrew is leaving after this but andrew, i think he's going into the conference.
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it was great stuff this morning, thank you very much, andrew and we'll see you back here monday morning. >> "okay, thanks." coming up, we've been bringing you top fund managers as part of our "what's working" series. up next blackrock -- perfect, right to black brock, dennis stattman, manager of the blackrock global allocation fund which has averaged better than 11% annual returns over the last ten years, and in the next half hour the tea party's take on paul ryan's debate performance and maybe we'll hear what chairman armey has to say about vice president biden as well. army, co-chairman of freedomworks. next week, "squawk box" is going back to school. we'll bring you interviews with the endowment managers that college students depend on to fund their universities. notre dame, northwestern, texas, michigan, and stanford. the portfolios directly responsible for training the workforce of the future.
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then don't miss sleep train's wbest rest event.st ever? you'll find sleep train's very best mattresses at the guaranteed lowest price. plus, pay no interest for 3 years on beautyrest black, stearns & foster, serta icomfort, even tempur-pedic. and rest even better with sleep train's risk-free 100-day money back guarantee. get your best rest ever from sleep train. superior service, best selection, lowest price, guaranteed. ♪ sleep train ♪ your ticket to a better night's sleep ♪ welcome back to "squawk box" everyone. all this week we are getting portfolio picks from top fund managers as part of our "what's
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working" series. this morning we are focusing on investing globally and what's hot, not just here in the united states but also around the world. joining us right now is dennis stattman, blackrock's global allocation team head manager and manager -- team head i should say and manager of the $53 billion bloc rock global application fund and dennis, thank you very much for joining us. when you look around the globe, how different are things, now that we have the fed, not only the fed jumping in with qe3 but other central banks getting in on the act. how much more difficult does that make your job? >> well, it's right now a battle between qe infinity plus what the other central banks are doing versus unfortunately deteriorating fundamentals. what may be somewhat different with this round of qe is that it's coming at a time when central banks around the world are more in line with what the fed's doing, in other words, there is more widespread ease
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for qe3 than there was at the time of qe1 or qe2. on the other hand, as we look around the world, many economic indicators that we look at, and this is not confined to any single region, it's true in asia, in europe, and the u.s., there are a lot of indicators that are not looking so good for the direction of economic growth, also margins appear to be coming under pressure at this time, so the earnings outlook i would say is getting a bit more dim compared to where it had been earlier in the year. >> you know, you say stocks are not as cheap because of the "e" in the pe part of the cycle, we're coming down off of that. is there anything that would change your mind if you don't like stocks as much what does look more attractive? >> well, actually i feel okay about the stock market and i'm a value investor and when i look at the surface metrics of
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stocks, the valuations are very undemanding, in fact you can find a lot of stocks that look pretty cheap. our problem with valuation is not the "p" in pe, but rather the "e," and in particular, our concern is that we are at very high levels of profitability already, whether you look at corporate profit margins or whether you look at the profit share of gdp. today the profit share of gdp is very close to the peak in the post war period, and what this means to us is that the sort of cyclical rebound that we might look at at this point in a typical economic cycle has really already happened and secondly, there have been very aggressive government policies, both monetary and fiscal, to stimulate the economy, and they have very, very stimulative for
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corporate profits. the problem is where do we go from here in those policies. >> and the areas you like though are the energy sector and health care, those are two places that you really still think are pretty attractive? >> yes, we do. energy for a variety of reasons, but in particular the valuations in energy are completely undemanding. there are a lot of cheap stocks there, whether you look at it on an asset basis, cash flow, dividend basis. there are an awful lot of stocks to choose from. >> what's one or two that you think are favorites? >> i don't want to get into individual names because we're a fund that manages on a very, very diversified manner, but i think you can look still at the integrated oil companies, whether they're in the u.s., or in particular the european based integrated oil companies look very inexpensive here. also, we need to keep sight of the fact that there is a huge
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secular increase in demand for oil coming from the emerging markets and in particular, china, and while we might have our questions about some cyclical bumps up or down, there's very little argument that over the next five to ten years the emerging markets are going to be demanding far more oil than they do today. >> dennis, i want to thank you very much for your time today, dennis stattman of blackrock. >> thanks. >> you're welcome. coming up we'll get the government's latest read on inflation at 8:30 a.m. eastern with producer price index numbers for september. >> i think the vice president very well knows that sometimes the words don't come out of your mouth the right way. s coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futures and forex with in-depth analysis. it's an all-you-can-eat buffet for all things trading. thinkorswim by td ameritrade.
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kayla tausche has been monitoring the jpmorgan media call. she joins us now and continues to trade up a little bit unlike wells fargo. >> unlike wells and jpmorgan off of the highs once investors digested some of the information. some interesting points on the call, a lot of questions surrounding the synthetic portfolio, jamie dimon saying what's left in the portfolio of the whale "i wouldn't worry about it." potential losses are down 20% to 30% from the second quarter estimates of 700 million to 1.6 billion in additional losses.
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he even said they're not selling off the whole thing. there's a chance in the future it could make money. on mortgages the banks are really, really strong quarter, jamie dimon saying qe3 did help mortgage rates and helped volumes and mortgage originations up 29% and application volumes up about 26%. 75% of that business though refinancing so recycled money not new money. on the macro side for the second quarter dimon saying low rates hurt them and the bank has $12 billion in exposure to europe. normal is about $15 billion. they continue to do business in italy and spain. back to you. >>s they' interesting, putting their exposure to europe? >> they had 6 billion last quarter so it is up slightly but it's not in the range of worry here. >> kayla, thank you very much, kayla tausche. when we come back breaking numbers on inflation, a few minutes away from produce are price index numbers for september. so far the equity futures have been indicated higher. you can see right now that the
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welcome back to "squawk box," everyone. we are just a few seconds away from producer price index numbers for september. this will give us a good indication of what's happening in inflation. rick santelli is standing by at the cme in chicago. rick it's great to see you this morning and take it away p give us the numbers, please. >> the survey says hotter than expected on inflation, up 1.1, month over month. however, however, if you extract the all-important food and energy, what's referenced as core, it was unchanged. so that is a bit cooler than the up 0.2 to 0.3 we were expecting. year over year numbers also lean hot and cold on the year over year headline up 2.1. hotter than our last look, hotter than expectations. but when you strip out the all important food and energy, it moderates a bit, that's year over year up 2.3. couple of tenths less than we looked at, our last look 2.5, that's what we were expecting
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again. it all depends on what your framework is. of course most people find some sort of significance with food and energy, although they understand it's volatile, just look at california gas prices. the market doesn't seem to have had a huge move on this. i take that back. they dropped a basis point or so, the preequities are holding firm and i think today we'll digest some of the 66 billion in supply we had this week and continue to digest exactly how everything going on in europe is going to eventually play out including the big prize they won, the big thing on the floor of course is they're taking the prize, dividing it by the population and trying to figure out how to distribute the proceeds. back to you. >> rick, thank you very much. stick around for a minute. liesman is here, too. steve you wanted to look at these numbers? >> i love the way rick says all important food and energy
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forcing me to say the opposite. >> i take rick's side on this. >> not t, i would say important but not necessarily always for policy purposes food and energy, unchanged on the core numbers here. >> is santelli still driving and eating, idiot, you haven't given up those, rick, you still drive a car and eat? you're getting fat and ruining the environment at the same time. stop! >> well i'll tell you, nobody wants to drive cars anymore. you know we want to be more like europe. we want cars that will fit in the trunk of the cars we used to drive. >> i bet you go to a drive-thru and eat and drive. >> you can't text and drive. you can eat and drive, you can have a big italian subway sandwich in your hand but you can't have a cell phone. i just look up the chain here, it's not non-existent but there is not a lot of pipeline pressure when i look up, look at
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intermediate goods and raw or unfinished goods. for example in the core i want to give you one number and then we'll move on. crude goods 2.8, again including but take out food and energy it's 1.6. those are big numbers but the thinking is they passed through. if they don't we have to examine fed policy. they are important. they are important. >> steve, yesterday you had a fantastic interview. >> thank you. >> with blankfein, with bowles, with simpson. >> right. >> and i think i could say, i watched every second of the 46 minutes or so that you guys were on. i mean this is stuff that's incredibly important to hear not only about what washington is think being this but also what business leaders are think being it. blankfein is one of 75 or 80 s&p 500 ceos saying washington needs to take this seriously. >> that's the significant development you point out, business is saying solve this thing. simpleson and bowles were interesting but it was cool to talk to blankfein who i've not had a chance to interview before
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and get his thoughts on the macro stuff rather than getting into the goldman earnings. they have earnings next week we'll be watching for, so we're in a quiet period about that. one of the things, we always talk about the dangers of not resolving the fiscal cliff. bla blankfein was interesting in talking about the upside, solving it. here's what blankfein had to say. >> some people respond to fear and some people respond to opportunity. take it from the other side, what if we came up with a situation tomorrow, you opened up the newspaper, and there was some conciliation, there was some agreement, it may not be everything one side would want, somewhere in the middle, maybe closer to the extreme you didn't like but there was some compromise that was laid out, what kind of a stimulus do you think that would provide? >> the confidence. >> tell me what your answer to that question is. >> huge. think of all the money -- >> how much would the market go up on that, lloyd? >> the market is a separate person. i'd be a buyer of the market. goldman sachs would, we are not
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only advisers to companies, we're a company ourselves. we would be assuming our business would grow, that companies would be making more acquisitions, making more investments, that we would be doing more financings and we have to get the people on board to provide those advice and those services. >> so i guess the question to me becomes what is the incentive from both sides to compromise. if blankfein is correct there is upside. everybody says there is a downside to doing the thing they don't want to do, but you should now subtract from that downside. >> remember last time we had the same part of the fiscal cliff and that's the bush tax cuts, we got that year-long whatever it was, we got a littl of an extension. that's not what blankfein is talking about. just solving this for six months, we're talking about the cliff and just long-term entitlement debt issues. >> he does talk about both sides now. >> both to happen for us to have
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a blastoff? i can't imagine a six-month push out of the cliff. >> something that would cause him, i agree with you. you don't need, joe, i think the, i think what he seems to be talking about is taking off, taking that armageddon off the table, it's that, a, we don't have this huge impact on gdp that would happen in january. it's actually more spread out. it doesn't all happen in january. it spreads out over a period of time. it's not necessarily a cliff but more of a slope, you have this drag on it. >> like a double "x"? >> i don't think it's a double "x." it's not a green. >> like a double blue. >> double blue. i see a lot -- >> with moguls? >> yes, with moguls and there's some ice on some of the moguls as well. to take the metaphor to the absurd degree and we've fallen down and we can't get up. >> right. >> what i think he's talking about is smoothing out that cliff, making so that it's not a
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huge impact at once and certainly the cliff effect comes from business right now being concerned about that and at least, joe, i think what he's saying is, put the fiscal issues on a path for resolution. >> six months down the road, nine months down the road you have something that would kick in or a couple of years down the road if that's what it takes. they all did say you don't want to see higher taxes right now. >> i don't think anybody is out there saying cut it now, make the deficit, balance the budget right now. nobody's saying that. they're saying over a course of ten years but show me, "a" there's a process and "b" what the solutions are. one of the things that spookz people in the divisions among the parties. >> what i think is interesting is there's all this upside even though business leaders, most don't think we're going over the fiscal cliff. they don't think washington would be that stupid even though alan simpson said they would be that stupid. >> the question came up at the table yesterday was, is the
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market trading with the inherent belief that there will be a deal? >> seems to be. >> in the deepest -- >> that was bowles' assumption that 30% to 35% chance we go off the cliff and there's a not a quick fix. >> in the deepest root of the political system sanity is the at core. >> even if it's not sanity, you go off and if the market reacts harshly it whips everybody back into shape like you saw with t.a.r.p. you'd think that would make everybody get back to the table. >> everybody finds god. >> we had altman on the other day and he was a little bit sobering in his, and i don't know if awe greed with him about how long it takes to do actual tax reform. >> yeah, no, i covered some of it, yeah. so doing a real simpson-bowles is not going to happen in three months, six months, a year. >> no. >> so doing the cliff first it's going to seem like it's going to be we're going to be europe kicking the can down the road. >> and roger afterwards said don't confuse simpson-bowles with solving the fiscal cliff. >> that's what i mean. >> they are different ideas. could i play one bit of sound
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from alan simpson? we need to play a little bit of alan simpson every day. let's hear that sound i have from him. >> you spend a buck a second, you wouldn't hit a trillion for 32,500 years and if you spent a million a day since the birth of christ you wouldn't be at a trillion and the big bank theory of the universe happened 13 million 600 million years ago and that ain't close to a trillion and we owe 16 of those babies. >> you know, then there was the quote about the healthiest horse in the glue factory which he pointed out. did you hear that one, joe? >> no. >> the u.s. is the healthiest horse in the glue factory. >> saying the color brought on to the numbers is something that i find, we ought to listen a little bit every day to him. >> normally we'd ask for the simpson found and get a doh or something! now it's different. >> simpson style. >> double diamond, black diamond. >> a double diamond is a cliff
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but a double blue has a little extra slope to it. that's my speed on the ski slope. >> i don't know why i said double "x." in size. coming up, a post debate wrap-up with dick armey, cochairman of freedomworks, we'll get his take on the vice president's performance as well as paul ryan's and it what it will mean for u.s. equity futures.
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they're pushinging the continuation of a tax cut that would give an additional $500 billion in tax cuts to 120,000 families. >> there aren't enough rich people and small businesses to tax to pay for all their spending. and so the next time you hear them say don't worry about it, we'll get a few wealthy people to pay their fair share, watch out middle class, the tax bill is coming to you. >> those were the vice presidential candidates sparring last night over taxes. joining us former house majority leader and freedomworks co-chairman dick armey. we're in a world, dick, internet, blogs everywhere and i've looked at so much stuff and i think i've finally gotten down to all right, it sets us up for the next debate between the president and governor romney. do you have a different -- did
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it really change anything that much last night, do you think, leader armey? >> well, no, i think it did for the people with whom i work and all our activists across the country. we had a real confirmation that paul ryan is the guy we know him to be, and his breath is far greater than just the economic issues. he's reliable, innovative, creative, courageous, and well-mannered. now, on the other side, we saw vice president biden as the personification of the arrogance of a self-righteous income redistributor with no sense of good manners or even respect for his opponent. i think joe biden again confirmed for our folks, yes, they really are as frightening as we thought they were. they just plain don't give a damn about anybody but
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themselves, and their immediate job security in these positions, quite frankly, i thought joe biden last night was more scary than i had ever known him to be. he just really was offensive, but he really also demonstrated an arrogant unwillingness to even hear the other side. >> let me ask you this one thing off the debate, whether it's fire or not we call you a proxy for the tea party, dick. when did romney really earn the love and respect of you and the tea party? has he at this point finally? you're giving a lot of compliments to congressman ryan, but do you think the enthusiasm with the tea party is on a scale of one to ten for governor romney, what is it, now? >> oh it's very high now, on two accounts.
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one, his selection of paul ryan was a great boom to us. we really felt like all right he's really serious. he wants to put policy first, he wants to put political courage ahead of political convenience. he wants substance ahead of ceremony and then the other thing is, as we begin to focus on the extent to the facts that this government is broken, we have a dysfunctional congress, we need a president that can fulfill the harry truman commitment that the only power i have is the power to make a bunch of damned fools do what they ought to be doing anyway. we've got to have a president that forces congress to get serious and go to work and fixes the broken executive branch that's just run amuck with executive orders and all kinds of bureaucratic mandates and so forth, and so the managerial capabilities to reorganize this government and make it, in fact, once again a functional servant
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of the best interests of the american people rather than political agent of me and my party is something we now see in romney as of paramount importance and frankly a guy who has proven in the past yes i'm a guy who will reorganize this outfit and make it work properly. this is very important to us. >> leader armey, last night what you saw in that debate depends on where you were sitting as you headed into it. i know you said you were offended by vice president biden, but the left was fired up by his performance. this was the attack that a lot of them had been looking for. i wonder what do you think about people in the middle, what do you think they took away from this debate? >> well, first, i expected the left. i've sat in enough faculty lounges and hung around with enough liberals to understand they got a meanless about them and they think themselves to be intellectually and morally superior so for them they saw
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biden punishing this guy, poor misguided young man who just simply got on the wrong side of everything. so the fact of the matter is, i expect the left to rejoice in that kind of mean, ill-mannered behavior, that's what they do. on the other hand, from our point of view, what we've said to the people in the center is, if you want somebody who will approach the problems, be willing to work on a bipartisan basis as romney has proven in massachusetts, and remember again, the point that biden refused to let young paul ryan get out was he had a bipartisan approach to medicare and health care. >> dick, let me ask you something real quick. as a network we want to try to help solve maybe some of these problems, do more than just report on them. to do the fiscal cliff, to do what we need to do for simpson-bowles or something like it, to solve our long-term
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problems, we are going to have to do this both sides are probably going to have to give something up, maybe just a little but it's got to look like a compromise or else it doesn't get done. what do you think the tea party is willing to give up on, some deeply-held belief, if they get something in return from the democrats, what are you willing to do? >> well, one of the first things you have to understand about our activists is we appreciate the importance of economic growth in the private sector to give you real job creation and real job security. our notion on keeping taxes at a non-repressive level against economic growth is extremely important, if you want to get the increased revenues. so we want to say increase government revenues by growing the economy, make room for that growth by cutting back on government spending, and let me just say something very clearly. anybody in this country today
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that thinks that we have to continue subsidizing antiquated notions like public television or cut the marine corps instead of americorps in these circumstances circumstances of the allocation of scarce resources, is just missing the point. so the fact of the matter is, we need to get people to understand on both sides that growing in the private sector cannot happen if, in fact, you put repressive onerous tax burdens on the investors in the economy. and investors are what make things happen. >> all right. thanks for your time today. we appreciate it. good to see you. when we come back, we're going to get jim cramer's take on earnings from jpmorgan and wells fargo. and steve liesman's interview with blainefein, simpson/bowles. [ horn honks ]
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welcome back to "squawk box." let's get to the new york stock exchange. jim, you have wells fargo and jpmorgan out today. what do you think? >> jpmorgan looks extremely good to me. i know a lot of people tell me why it isn't good. the company has made a comeback off of what was happening a few months ago. frankly, just kind of a picture-perfect quarter.
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wells fargo owe my charitable trust owns both. my feeling, no, it was not what i wanted to see. i do believe that wells farg is taking over the country in terms of mortgage servicing, taking over the country in terms of market share mortgages but not making enough money. that interest margin was disappointing. i like to point out when i'm wrong, i believe ultimately i will be right on wells fargo, but this is not what i wanted to see. >> so a hiccup this time around. jim, thank you. great seeing you and wonderful being on-set with you last night. >> a great job last night, guys. >> you did a great job. see you in a few minutes. we heard from some big names this morning, highlights coming up next. monday on "squawk box," he's the governor of a swing state. florida's rick scott will be our guest host. plus, two "squawk" market masters on europe, the economy and stock picks for your portfolio. mark mobius, and neel kashkari
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of pimco. starts monday at 6:00 a.m. eastern only on "squawk box."
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earlier this morning, we brought you interviews with top ceos and money managers from the annual barron investment conference. if you didn't tune in at 6:00 a.m., well, we're mad. but here's what you missed. >> nobody is looking at stocks. everyone is afraid. so there's all these opportunities. so he's got opportunities in his business to arrange finance, executive interest and to invest in stocks at really great prices. >> so you need to know what price to pay and what kind of companies to buy. the fiscal cliffs will be resolved. probably won't be resolved in a lame duck session, but probably early in next congress, the new president will work with congress and get a deal that will probably resolve these issues for a while. >> i think if you believe that romney is going to win the election, you should go long on the stock market. my idea of marketing is to concentrate on the staff that touches the public in the hotel. and that can probably explain to you why i have become so
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concerned about what's happening in washington. >> the valuations in energy are completely undemanding. there are a lot of cheap stocks there. whether you look at it on an asset basis, cash flow basis, dvd deal bases, there are an awful lot of stocks to choose from. >> i'm not going to let you do it. >> what? >> i see what's coming. >> no, you don't see what's coming. i just wanted to thank our guests who were here today. ackshea and aj. >> you can't read this last -- this is not fair. you did this last week. >> you're just mad about the red sox last night. we're watching the futures this morning and we see some green arrows, positive indications we've been watching all morning long. this is coming after the dow, the s&p and nasdaq all had minor losses yesterday. by the way, the s&p is down about 2% for this week. so we'll see how